Title: The Global Pursuit of Tax Revenue: Would Tax Haven Reform Equal Increased Tax Revenues in Developing States?
Abstract: Abstract FootnoteThe title question reflects an embedded assumption present in a selection of academic publications and civil society reports considered here, and juxtaposed against the institutional capacity of developing state tax administrations. One conclusion in this literature is that eliminating tax havens will lead to increased tax revenue for the developing economy. However, the role performed by the tax haven generally serves more to reduce tax obligations in the developed home jurisdiction than to influence the multinational corporation's tax obligations in the developing economy host jurisdiction. In the global perspective it is concluded that the elimination of tax havens could help developed states' tax revenue collection problems while offering no clear benefit to developing economies due to the nature of institutional capacity in their tax administrations. *My thanks for the guidance provided by the anonymous referees and editorial team in reducing the polemical tone of the original manuscript. All errors and misconceptions remain my responsibility. Notes *My thanks for the guidance provided by the anonymous referees and editorial team in reducing the polemical tone of the original manuscript. All errors and misconceptions remain my responsibility. 1. G20, “London Summit—Leaders' Statement”, 2 April 2009, available: <http://www.g20.org/pub_communiques.aspx> (accessed 3 April 2009). 2. Organisation for Economic Co-operation and Development, Harmful Tax Competition: An Emerging Global Issue (Paris: OECD Publications, 1998), p. 16. 3. Allison Christians, “Taxation in a Time of Crisis: Policy Leadership from the OECD to the G20”, Northwestern Journal of Law and Social Policy, Vol. 5, No. 1 (2010), pp. 19–40. 4. Ronen Palan, Richard Murphy and Christian Chavagneux, Tax Havens: How Globalization Really Works (Ithaca, NY/London: Cornell University Press, 2010), p. 188. 5. Deborah Bräutigaum, Odd-Helge Fjeldstad and Mick Moore (eds.), Taxation and State-Building in Developing Countries: Capacity and Consent (Cambridge: Cambridge University Press, 2008); Max Everest-Phillips, “State-Building Taxation for Developing Countries: Principles for Reform”, Development Policy Review, Vol. 28, No. 1 (2010), pp. 75–96. 6. William Vlcek, “The Caribbean confronts the OECD: tax competition and diplomacy”, in Andrew F. Cooper and Timothy M. Shaw (eds.), The Diplomacies of Small States (Basingstoke: Palgrave Macmillan, 2009), pp. 264–278. 7. For one extended consideration of this discourse see Palan et al., op. cit., pp. 23–35. 8. G20, op. cit. 9. Christians, op. cit. 10. John Christensen, “The Looting Continues: Tax Havens and Corruption”, Critical Perspectives on International Business, Vol. 7, No. 2 (2011), p. 179. 11. Palan et al., op. cit., p. 4. 12. Ibid., p. 172. 13. Ibid., pp. 173–175. 14. Charles P. Kindleberger, International Capital Movements (Cambridge: Cambridge University Press, 1987), p. 58. 15. Palan et al., op. cit., p. 238. 16. Ibid., pp. 244–247. 17. Ibid., p. 63. 18. Dries Lesage, David McNair and Mattias Vermeiren, “From Monterrey to Doha: Taxation and Financing for Development”, Development Policy Review, Vol. 28, No. 2 (2010), p. 156. 19. Ibid. 20. Ibid., p. 165. 21. James S. Henry, “Tax Offshore Wealth Sitting in First World Banks”, Forbes, 19 July 2010. 22. Lesage et al., op. cit., pp. 159–161. 23. Ibid., p. 169. 24. Ibid., p. 163. 25. Francis Weyzig and Michiel Van Dijk, “Incoherence between Tax and Development Policies: The Case of the Netherlands”, Third World Quarterly, Vol. 30, No. 7 (2009), pp. 1259–1277. 26. Ibid., p. 1262. 27. Palan et al., op. cit., pp. 40ff. 28. De Nederlandsche Bank, “Netherlands Leads the Field in Direct Investment”, 9 August 2011, available: <http://www.dnb.nl/en/news/news-and-archive/dnbulletin-2011/dnb256487.jsp> (accessed 26 August 2011). 29. Lynnley Browning, “The Netherlands, the New Tax Shelter Hot Spot”, New York Times, 4 February 2007. 30. Weyzig and Van Dijk, op. cit., pp. 1265–1269. 31. Ibid., p. 1274. 32. Ibid. 33. Jesse Drucker, “Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes”, Bloomberg, 21 October 2010; Laura Slattery, “How Google Dines on 'Double Irish' or 'Dutch Sandwich'”, The Irish Times, 25 October 2010; Lynnley Browning, “Insight: Microsoft Use of Low-Tax Havens Drives Down Tax Bill”, Reuters, 27 July 2011. 34. Peter Reuter, “Introduction and Overview: The Dynamics of Illicit Flows”, in Peter Reuter (ed.), Draining Development? Controlling Flows of Illicit Funds from Developing Countries (Washington, DC: The World Bank, 2012), pp. 1–5. 35. James Andreoni, Brian Erard and Jonathan Feinstein, “Tax Compliance”, Journal of Economic Literature, Vol. 36, No. 2 (1998), pp. 818–860; Lars P. Feld and Bruno S. Frey, “Trust Breeds Trust: How Taxpayers Are Treated”, Economics of Governance, Vol. 3, No. 2 (2002), pp. 87–99; Lars P. Feld and Bruno S. Frey, “Illegal, Immoral, Fattening or What? How Deterrence and Responsive Regulation Shape Tax Morale”, in Christopher Bajada and Friedrich Schneider (eds.), Size, Causes and Consequences of the Underground Economy: An International Perspective (Aldershot: Ashgate, 2005), pp. 15–37; Simon James, “Tax Compliance Strategies to Tackle the Underground Economy”, in Bajada and Schneider, op. cit, pp. 275–289.; Bruno S. Frey and Benno Torgler, “Tax Morale and Conditional Cooperation”, Journal of Comparative Economics, Vol. 35, No. 1 (2007), pp. 136–159; Ronald G. Cummings et al., “Tax Morale Affects Tax Compliance: Evidence from Surveys and an Artefactual Field Experiment”, Journal of Economic Behavior & Organization, Vol. 70, No. 3 (2009), pp. 447–457. 36. Tax Policy Center, “Historical Amount of Revenue by Source”, 24 March 2011, available: <http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203> (accessed 18 August 2011). 37. Jonathan Di John, “Taxation, Developmental State Capacity and Poverty Reduction”, International Journal of Social Welfare, Vol. 20, No. 3 (2011), p. 271; Martin Daunton, Trusting Leviathan: The Politics of Taxation in Britain, 1799–1914 (Cambridge: Cambridge University Press, 2001), pp. 10–11. 38. Odd-Helge Fjeldstad and Mick Moore, “Revenue Authorities and Public Authority in Sub-Saharan Africa”, The Journal of Modern African Studies, Vol. 47, No. 1 (2009), pp. 4–5. 39. Christian Von Soest, Karsten Bechle and Nina Korte, “How Neopatrimonialism Affects Tax Administration: A Comparative Study of Three World Regions”, Third World Quarterly, Vol. 32, No. 7 (2011), p. 1310. 40. Von Soest et al., op cit., p. 1325. 41. Ibid., pp. 1317–1319. 42. Ibid., p. 1325. 43. Fjeldstad and Moore, op. cit., pp. 2–3. 44. Ibid., pp. 4–10. 45. Ibid., p. 14. 46. Ibid., p. 9; Alice Sindzingre, “Financing the Developmental State: Tax and Revenue Issues”, Development Policy Review, Vol. 25, No. 5 (2007), pp. 619–620. 47. William Vlcek, “Behind an Offshore Mask: sovereignty games in the global political economy”, Third World Quarterly Vol. 30, No. 8 (2009), pp. 1465–1481. 48. Jane Bradley, “Organised Criminals Target Scots Smokers with Illegal Cigarettes”, The Scotsman, 9 August 2011. 49. Christian Aid, Blowing the Whistle: Time's up for Financial Secrecy (London: Christian Aid, 2010). 50. Robert Watts, “English Premier League Clubs Flee to Tax Havens”, The Sunday Times, 16 May 2010. 51. Christian Aid, op. cit., pp. 33–34. 52. Ibid., p. 5. 54. Ibid., p. 17. 53. Ibid., pp. 8, 13, 36–37. 55. Ibid. 56. Roger Blitz, “Premier League Tax Contribution to Top £1bn”, Financial Times, 28 August 2011. 57. Open Society Institute of Southern Africa, Breaking the Curse: How Transparent Taxation and Fair Taxes Can Turn Africa's Mineral Wealth into Development (Johannesburg: Open Society Institute of Southern Africa, Third World Network Africa, Tax Justice Network Africa, Action Aid International, Christian Aid, 2009). 58. Charles Oman, Policy Competition for Foreign Direct Investment: A Study of Competition among Governments to Attract FDI (Paris: Development Centre of the Organisation for Economic Co-operation and Development, 2000). 59. Open Society Institute of Southern Africa, op. cit., pp. 19–36. 60. Ibid., pp. 30–32. 61. Ibid., p. 44. 62. Ibid., p. 26. 63. Clemens Fuest and Nadine Riedel, “Tax Evasion and Tax Avoidance: The Role of International Profit Shifting”, in Reuter, Draining Development, op. cit., pp. 114–122. 64. Martin Hearson and Richard Brooks, Calling Time: Why SABMiller Should Stop Dodging Taxes in Africa (London: ActionAid UK, 2010), pp. 21–22. 65. Ibid., p. 23. 66. Ibid., pp. 24–25. 67. Ibid., p. 26. 68. Ibid. 69. For one perspective on these changes for the global political economy see Adrian Wooldridge, “Special Report: State Capitalism”, The Economist, 21 January 2012. 70. Geoffrey R.D. Underhill and Xiaoke Zhang, “Conclusion: Towards the Good Governance of the International Financial System”, in Geoffrey R.D. Underhill and Xiaoke Zhang (eds.), International Financial Governance under Stress: Global Structures versus National Imperatives (Cambridge: Cambridge University Press, 2003), p. 371. 71. Palan et al., op. cit., p. 22. 72. Ken Silverstein, “Oil Boom Enriches African Ruler”, Los Angeles Times, 20 January 2003. 73. Robert Frank, “The Price of Taxing the Rich”, Wall Street Journal, 26 March 2011.
Publication Year: 2013
Publication Date: 2013-04-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 1
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